meeting was to discuss an issue different to A’s intended motive, namely, to secure the transfer of an option which B enjoyed over commercial property assigned to A. In the course of this meeting, A gave the impression that he was looking to expand the business run from those premises, when, in fact, he wished to close the business down, provided he was able to secure the transfer of B’s option to himself. As a result of the meeting, B transferred the option to A, but later sought rectification of the written document when A’s real motives were discovered. At first instance, it was held that, since A did not have actual knowledge of B’s mistake, rectification was not possible. However, the Court of Appeal reversed this ruling on the ground that the contract should be performed in accordance with B’s understanding as to what had been agreed. Accordingly, the contract was rectified in the light of A’s unconscionable conduct. In Bates (Thomas) & Son Ltd v Wyndham’s (Lingerie) Ltd, the tenants of premises leased from the plaintiffs, on previous occasions, had contracted for an option to renew the lease at a rental to be fixed by arbitration, in the event of a dispute. The new lease which the parties had entered into did not contain any provision for arbitration. The tenants were aware of the omission, but did not draw the fact to the attention of the plaintiffs. In the event, the court declined to order rectification because there was a chance of some inequitable benefit to the person who was aware of the plaintiff’s mistake: Bates (Thomas) & Son Ltd v Wyndham’s (Lingerie) Ltd [1981] 1 All ER 1077, CA, p 1085

doi:10.4324/9781843141518-131

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meeting was to discuss an issue different to A’s intended motive, namely, to secure the transfer of an option which B enjoyed over commercial property assigned to A. In the course of this meeting, A gave the impression that he was looking to expand the business run from those premises, when, in fact, he wished to close the business down, provided he was able to secure the transfer of B’s option to himself. As a result of the meeting, B transferred the option to A, but later sought rectification of the written document when A’s real motives were discovered. At first instance, it was held that, since A did not have actual knowledge of B’s mistake, rectification was not possible. However, the Court of Appeal reversed this ruling on the ground that the contract should be performed in accordance with B’s understanding as to what had been agreed. Accordingly, the contract was rectified in the light of A’s unconscionable conduct. In Bates (Thomas) & Son Ltd v Wyndham’s (Lingerie) Ltd, the tenants of premises leased from the plaintiffs, on previous occasions, had contracted for an option to renew the lease at a rental to be fixed by arbitration, in the event of a dispute. The new lease which the parties had entered into did not contain any provision for arbitration. The tenants were aware of the omission, but did not draw the fact to the attention of the plaintiffs. In the event, the court declined to order rectification because there was a chance of some inequitable benefit to the person who was aware of the plaintiff’s mistake: Bates (Thomas) & Son Ltd v Wyndham’s (Lingerie) Ltd [1981] 1 All ER 1077, CA, p 1085

ABSTRACT

In Bates (Thomas) & Son Ltd v Wyndham’s (Lingerie) Ltd,33 the tenants of premises leased from the plaintiffs, on previous occasions, had contracted for an option to renew the lease at a rental to be fixed by arbitration, in the event of a dispute. The new lease which the parties had entered into did not contain any provision for arbitration. The tenants were aware of the omission, but did not draw the fact to the attention of the plaintiffs. In the event, the court declined to order rectification because there was a chance of some inequitable benefit to the person who was aware of the plaintiff’s mistake:

Bates (Thomas) & Son Ltd v Wyndham’s (Lingerie) Ltd [1981] 1 All ER 1077, CA, p 1085

Buckley LJ: The landlords claim rectification in the present case on the basis of a principle enunciated by Pennicuick J in A Roberts & Co, Ltd v Leicestershire County Council [1961] 2 All ER 545, pp 551-52; [1961] Ch 555 at 570: ‘The second ground rest on the principle that a party is entitled to rectification of a contract on proof that he believed a particular term to be included in the contract and that the other party concluded the contract with the omission or a variation of that term in the knowledge that the first party believed the term to be included ... The principle is stated in Snell’s Principles of Equity, 25th edn, 1960, p 569, as follows: “By what appears to be a species of equitable estoppel, if one party to a transaction knows that the instrument contains a mistake in his favour but does nothing to correct it, he (and those claiming under him) will be precluded from resisting rectification on the ground that the mistake is unilateral and not common.”’